If I were smarter I guess I might have seen this as more of a warning sign, don't know what I would have done anyway. I remember looking into the re-fi mkt for my own property on east coast, I saw a statistic 2 years ago that Californian's were 65% in I/O loans, many of which were done over 100% financing. Buy a house and get a check from the bank, upfront home equity loan, because home appreciation was on a rampant pace. I thought to myself, wow, what if mkt backs up instead of going up 5-10% every year like it has been and is expected to continue doing. 'You could get in serious trouble', I thought. I'm no Nostradomas, but I can't believe this wasn't obvious to the people in gov't that 'protect' consumers. Now they are screaming bloody murder about predatory lending. We all blame Bush II for this, actually it was Clinton's first bill passed that 'forced' the banks hands into this. He didn't want to do it, was handcuffed because it was one of his campaign promises.
I've been here for the last several weeks shopping for Real Estate bargains. In my little section of town RE prices are strong, restaurants are packed, Theaters are packed and new apartment and condo construction seems to be going up on every corner.
I'm seeing this too in my neck of the woods (not cali) but suspect it is a function of shifting patterns of consumption. People are hurting, but not down for the count (yet). Lost your job and been foreclosed upon? Lots of time to spend. Go out and watch a movie. Have some eats and drinks at a lower priced place. Higher end diners are migrating down too - think of all the high end resturants serving $30-$40 plates that are struggling for business (with some rare exceptions). People have migrated down to the $11-$19 or the under $10 market instead. I know I have and I can still afford the former. Anecdotal of course. RE is not moving at all from what I can see. Houses "for sale" that have been pulled from the MLS by their brokers to not cannibalize newer listings.
was just in Vegas...amidst the plethora of 100K-180K homes... formerly selling for 400-480K... bargooons?
If the "credit bubble adjustment" continues for several more years (odds of that are high, I think... unless the Gummint forces us into hyperflation-destruction first), prices will be much lower nearly everywhere.
I know few people on ET understand how this works, regardless of their supposed RE savvy. Those projects are probably doomed but they will get finished if the loan was approved & assigned. The bank demands that it is finished, even if most units go unsold. I see the same thing in NYC, many projects were started with the meltdown, and unless the bank backed out, they have to be finished.
Just my 2 cents but you've been around too. When L.A. was falling apart from 89-94, NYC had a much more modest decline with the bulk of the weakness in the CT and NJ suburbs. IMO this mini-break in Cal is a buying opp just like New York was a great buy on that dip. When L.A. bottomed in '94, just think of the bad "fundamentals" guys like you hung tight through. Northridge quake, King Riots, Crips vs. Bloods, OJ verdict, same fucked up fiscal situation as today, white flight etc. Yet SoCal in 94 was the buy of a lifetime. Because of topography California is literally a place that can't create more buildable land. And I'd guess on your side of the border with a MUCH better tax situation than Cal, prices will stay extra firm. Florida looks like a crude oil chart, California looks like a gold chart. No doubt which one is still in a bull pattern and which market will take years to recover.......
The culture of personal greed and lack of principles and honesty is to blame imho From afar it looks like Cali is full of fatcats, wackoes and illegal immigrants. A distorted image no doubt to sell more magazines etc. but really ! What happened to decent people ? Musta got trampled in the rush for the trough !!